ATLANTA, Jan. 20, 2015 /PRNewswire/ -- AdCare Health Systems, Inc. (NYSE MKT: ADK), (NYSE MKT: ADK.PRA), a leading long-term care provider, today announced that, as part of its ongoing strategic plan to transition from an owner and operator of healthcare facilities to a healthcare property holding and leasing company, it has signed an agreement with Aria Health Group, LLC operators to lease 10 of its skilled nursing facilities in Arkansas.
The lease on the 10 facilities in Arkansas will be effective on March 1, 2015, when all licenses and other approvals required by the State of Arkansas are expected to be obtained by the operator.
Under the terms of the triple net lease agreements, the lessees of the facilities will be responsible for day-to-day management, ongoing maintenance and facility improvements for the duration of the leases. The initial term of the leases is five years with a five year renewal option. The annual rent in the first year will total $6.5 million and will escalate at 2% each year through the initial term and 3% per year upon renewal.
"We are pleased and excited to work with a new operating partner in Arkansas," commented Bill McBride, AdCare's President and Chief Executive Officer. "Aria has a very strong management team with a significant operating presence in the state. This transaction represents another significant step forward in the execution of our strategic plan of transitioning to a healthcare property holding and leasing company. We continue to move quickly to secure the necessary approvals and to finalize negotiations with additional operators to lease our remaining facilities."
Management currently expects that a majority of the remaining facilities will be leased or subleased, subject to approval from landlord, lenders, regulators, and/or the U.S. Department of Housing and Urban Development ("HUD"), by the end of the first quarter of 2015.
Aria Health Group, LLC, which currently operates six facilities in Arkansas, and is a full-service management company focused on the hospice, long-term care, and senior housing sectors of the health care industry.
Since the Board approved the strategic plan to transition the Company's business from an owner and operator of healthcare facilities to a healthcare facilities holding and leasing company, the Company has entered into agreements to lease or sublease 24 of its 37 healthcare facilities. Of these 24 healthcare facilities,
- Eight are completed transactions.
- The Company expects to complete transfer of operations on the 10 Aria buildings during the first quarter of 2015.
- The remaining six healthcare facilities are expected to close during the first quarter of 2015 when financing approval is obtained from HUD.
About AdCare Health Systems
AdCare Health Systems, Inc. (NYSE MKT: ADK) (NYSE MKT: ADK.PRA) is a recognized provider of senior living and health care facility management. The Company owns and manages long-term care facilities and retirement communities, and since the Company's inception in 1988, its mission has been to provide the highest quality of healthcare services to the elderly through its operating subsidiaries, including a broad range of skilled nursing and sub-acute care services. The Company has implemented a strategic plan pursuant to which, through a series of leasing transactions, it will transition from an owner and operator of healthcare facilities to a healthcare property holding and leasing company. For more information about AdCare, visit www.adcarehealth.com.
Important Cautions Regarding Forward-Looking Statements
Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of federal law. Such statements can be identified by the use of forward-looking terminology, such as "believes," "expects," "plans," "intends," "anticipates" and variations of such words or similar expressions, but their absence does not mean that the statement is not forward-looking. Statements in this announcement that are forward-looking include, but are not limited to: (i) statements regarding the strategic plan to transition the Company to a healthcare property holding and leasing company; (ii) statements regarding operating expenses, cash flow, return on investment, profitability and shareholder value; (iii) statements regarding dividend yield; and (iv) statements regarding the outlook for financial metrics.
Such forward-looking statements reflect management's beliefs and assumptions and are based upon information currently available to management and involve known and unknown risks, results, performance or achievements of AdCare, which may differ materially from those expressed or implied in such statements. Such factors are identified in the public filings made by AdCare with the Securities and Exchange Commission and include, among others, AdCare's ability to secure lines of credit and/or an acquisition credit facility, AdCare's ability to refinance its current debt on more favorable terms, AdCare's ability to expand its borrowing arrangement with certain existing lenders, AdCare's ability to raise equity capital, AdCare's ability to improve operating results, changes in the health care industry because of political and economic influences, changes in regulations governing the health care industry, changes in reimbursement levels including those under the Medicare and Medicaid programs and changes in the competitive marketplace. There is no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements. Except where required by law, AdCare undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.
In addition, each facility mentioned in this press release is operated by a separate, wholly owned, independent operating subsidiary that has its own management, employees and assets.
References to the consolidated Company and its assets and activities, as well as the use of terms such as "we," "us," "our," and similar verbiage, is not meant to imply that AdCare Health Systems, Inc. has direct operating assets, employees or revenue or that any of the facilities, the home health business or other related businesses are operated by the same entity.
SOURCE AdCare Health Systems, Inc.